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The use of prenups has increased five times in the past two decades for millennials, according to the American Academy of Matrimonial Lawyers (which defines millennials as those ages 18 to 34). Celebrities like Kylie Jenner and Justin Bieber have signed premarital agreements with their partners, and many young marrieds active in the startup world think that premarital agreements are a wise move.

A prenup lets entrepreneurs protect what they have worked so hard for. Up-and-coming millennials and entrepreneurs are waiting longer to get married. As a result, they typically have more assets, accumulated wealth from a 401(k) and stock options and possibly real-estate ventures. They could potentially lose a lot, if a prenup isn’t put into place. They also need to protect their intellectual property, and the very idea of a business has to be protected. For example, with Kylie Jenner and her makeup line, she decided to shield what assets she has now and those she’ll accumulate throughout her marriage. Her business won’t be communal property.

A marriage is a two-person team, so a couple should carve out some partnership in their marriage. This is commonly the family home or the greater salary, but investment properties are best left undivided. If you think a prenup is good for you and your fiancé, remember these guidelines:

Work with a business attorney. Your legal counsel must be business savvy and understand how to best plan for future contingencies. Each party should also have their own separate attorney for a prenup to be valid.

Plan ahead with a prenup. Don’t begin arranging for a prenup a month before your wedding. If you have significant assets, it will take some time to draft.

Look at the details. Determine if your partner has offshore accounts. It also matters where you will reside. Some techies, originally from China or India, have international attorneys that increases the time required to draft an agreement.

Every prenups is unique. There’s no one size fits all. There are many variables and they’re unique to each relationship.

Experiencing a divorce is a difficult time, and a prenup may give you some well-deserved protection.

09/15/2018

“When nearly seven decades of hard work and record sales translate into, at best, a quarter of Taylor Swift’s career earnings, the generational scale is broken.”

It’s become a common scenario: a star who worked past their traditional retirement age and was beloved by generations dies with career earnings that wouldn’t even pay a corporate CEO salary for one year.

She sold 75 million records and is credited as a songwriter on hundreds of albums by other artists. However, even the most generous estimates of her career earnings are no more than $80 million.

Compare her to Taylor Swift. She started at about the same age, has been working one fifth as long and the same calculations say she’s worth more than $300 million.

The mega stars in Aretha’s imperial period didn’t earn as much as they do today. Management was often aggressive and took a huge chunk of every dollar earned from the artists’ record sales, concerts, merchandising, and media appearances.

Aretha also didn’t do herself any favors, by allowing her husband to manage her early career. When they divorced, he took a lot of her lifetime earnings with him. A raw deal or not, it was the way the industry worked at the time. As a result, paying alimony meant she had to keep working for her ex.

That may be why Taylor Swift hasn’t gotten married. Despite a finely crafted prenuptial agreement and trusts to protect her money, a wrong decision could cost her hundreds of millions of dollars.

The music industry has changed dramatically. Traditional revenue sources never really grew much bigger than they were in the 1960s. Some, like selling the actual music, tanked and have yet to revive. Today’s music icons, like Taylor Swift, thrive because they manage their own tours and take in ticket income rather than record sales. Many own their own publishing outlets, and that maximizes their percentage of every song they sell. That’s not how it worked in Aretha’s day.

However, Aretha died with money in the bank. Her children will inherit considerable sums. She most likely gave huge amounts to charity and did it in the most tax-efficient way her advisers could find.

For Aretha, her record sales will spike and unreleased material will get monetized. Her image, name, and authorization will generate merchandising and royalty income. Her brand will also continue to live on forever.

Rome notes that summer is wedding season. Whether you’re taking the plunge later in life—maybe for the second time or advising a young couple about to make the ultimate commitment—much of the thought process is the same. There’s perhaps no topic less uncomfortable, but more important, than finances.

Before you or a loved one say, “I do,” be sure to consider the following:

Transparency. Many divorces stem from a lack of honesty about finances. Before you walk down the aisle, be sure you know everything about your betrothed’s financial past, spending habits, investing philosophy, and goals for the future. That means sharing information on major debts from education, business, and home loans, as well as credit scores and bankruptcy history. If you’re entering a second marriage, be truthful about any alimony being paid to or received from a former spouse.

For those marrying later in life, think about how or whether to merge accumulated assets and how to compromise on handling financial affairs, after what may have been many years of individual decision-making.

Financial Roles. For co-mingled finances, it’s important to be certain that you’re clear on who will handle what. Many financial issues that arise later in life, are due to one spouse not knowing what’s going on and being deluged with a mountain of new information and decision-making, in the event of a spouse’s sudden illness or death.

Prenuptial Agreement. Detailing what will happen to assets, if the marriage fails, isn’t about a lack of trust—it’s about being prepared.

Estate Planning. Organize your property to ensure that no matter what happens, your family’s financial needs will be met. This includes drafting powers of attorney, creating or revising your wills, purchasing life insurance policies, revisiting retirement accounts and investment funds, establishing trusts and naming beneficiaries and considering any tax implications.

An honest and sometimes difficult financial conversation isn’t something to which we look forward. However, couples who avoid this, because they’re love-struck and blind to what the future may hold, will regret it later. Work with an experienced estate planning attorney and plan now.

06/04/2018

“Getting remarried gives people a fresh start, an opportunity to learn from the past and to move forward. Unfortunately, for most couples, the next trip down the aisle can also come with a host of new financial challenges.”

Create a consolidated net worth statement. One fundamental mistake many couples make is failing to look at their combined net worth, until they start talking about how they will pay for their wedding or another big-ticket item. Those who remarry frequently have more complex financial responsibilities, such as child support, liquid and illiquid investment assets, as well as estate planning and tax-planning strategies. The best course is to be upfront from the start to avoid damaging your relationship in the long run. Take time to review your individual financial situations, including liabilities, before you create a consolidated statement of net worth.

Sign a pre or postnuptial agreement. This can be uncomfortable but can be valuable for both parties, if there’s a divorce. A pre or postnuptial agreement is particularly important, since it's the only way to legally claim specific assets within a marriage. In addition, a prenuptial agreement may ensure that any children within the marriage are financially protected, in the event one spouse dies. It’s also important to remember, even if you're recently married and don't have a formal prenuptial agreement, state law will often have one for you.

Think about all of your kids. Some spouses who were married previously may bring children into their new relationship. This creates many financial issues. Determine as a couple how you’ll financially address major expenses, like health care, child care, and tuition. When you've decided, discuss your plan of action with an attorney to be sure you're considering all potential options and their long-term implications.

Update your beneficiary designations. This is a common error. Assuming you want to name your new spouse as a beneficiary, you should review all your accounts and update the documents.

Update your estate plan. Estate plans can be forgotten with all of the details of a wedding. Talk with an experienced estate planning attorney to review your situation and update or create wills, powers of attorney, and health care directives to be certain that your new spouse, or another trusted person, has the decision-making authority that reflects your wishes.

12/15/2017

“Remarrying later in life can create several complex financial, legal, and emotional matters that should be addressed.”

About a third of U.S. residents ages 15 and older have been married at least twice, according to the U.S. Census Bureau, and remarriage among Americans ages 55 and older is increasing. At the same time, younger people are becoming less likely to have remarried.

The Flagstaff (AZ) Business News recently published an article, “Financial Issues to Consider in Remarriages,” which suggests that you should be candid about your financial situation. Couples who are marrying for the second (or third) time frequently have financial baggage. You should eliminate issues later in the marriage by having open and honest discussions about assets, debts and obligations. Think about the following questions to get the talks started:

What financial obligations are we bringing to our marriage?

How are our credit scores?

Do we have financial obligations (alimony, child support) to our ex-spouse(s)?

Do we want to pool our finances?

Where will we live?

How will our marriage impact college financial aid for our children from previous marriages or relationships?

It is also important to update life insurance, medical directives and beneficiary designations. If you don’t do this and you (or your spouse) die, part of your estate could go to a previous spouse. If you and your spouse have living wills, health care powers of attorney or healthcare directives, review them with your estate planning attorney to ensure that these documents reflect your current wishes.

You should also consider how remarriage affects your retirement planning, like the benefits your partner may be receiving. These can include a deceased spouse’s social security benefits or pension payments.

Discuss estate planning with your attorney because subsequent marriages can impact estate plans—a common concern among older couples. An older couple is more likely than younger newlyweds to bring property and other valuables into the relationship. They often may want these family valuables to go to their own children from a prior marriage.

Beginning again with a new partner is exciting, even when the new marriage introduces complex financial considerations. Talking to each other, as always, is the key to long-term success.

10/13/2017

“The lawsuit brought against Alan Thicke‘s widow by the late actor’s two eldest sons has been dismissed.”

The probate attorney for Alan Thicke’s widow, Tanya Callau, announced that the petition filed against her in May by Thicke’s sons, Brennan and Robin Thicke, was dismissed. The petition said Callau alleged that the prenuptial agreement she signed before marrying Alan in 2005 was invalid.

Callau said she won’t contest the prenuptial agreement she signed and the judge agreed, saying there was no evidence she had planned that action.

At the same time, four-time Grammy nominee Robin said he was happy to hear his stepmother wouldn’t be contesting the prenup: “We are thrilled to hear that Tanya will no longer be contesting the validity of her pre-nuptial agreement with Alan, and has agreed to honor his last will and testament. Our father was a wonderful man, who all of us, loved very much.”

Los Angeles Superior Court Judge Clifford Klein said a new petition could be filed “if he has information supporting the sons’ assertions.”

Five months after Alan died in December after suffering a heart attack while playing hockey, Brennan and Robin filed the petition against Callau. Before he died, the two boys were named co-trustees of their father’s living trust if Alan’s brother, Todd, declined to take on the responsibility (which he did).

In February 2016, the most recent version of Alan’s trust was signed, and the two brothers alleged that Callau didn’t complain about the estate or prenup then. Alan left each of his sons “(in equal shares): ownership of the Carpinteria, California ranch that he bought in 1989 and desired to keep in his family forever (the “Ranch”), 75 percent of his personal effects, and 60 percent of his remaining estate.”

Callau was left “all of the Ranch’s furnishings, 25% of his personal effects, a $500,000 life insurance policy, all of his death benefits from pensions and union memberships and 40 percent share of his remaining estate. Alan also provided that Tanya may live in the Ranch after his death, so long as she maintains the property and expenses.”

But in the time since Alan died, Callau allegedly claimed the prenuptial agreement she signed over ten years ago is invalid. She claimed there is no chance the prenup could withstand a legal challenge and that she has very significant community rights in the trust’s assets and rights of reimbursement to improvements to the Ranch. She also claimed “Marvin rights,” arguing that she had to forego opportunities to pursue and advance her own career to support Alan and be his companion, including raising Carter.

The sons’ attorney also claimed that Callau had “threatened to make her claims fodder for ‘tabloid publicity’, unless the Co-Trustees agreed to participate in a mediation and succumb to her demands.”

09/25/2017

More millennials are delaying the exchanging of wedding vows until later in life. They are actually waiting much longer than previous generations. However, they’re more likely to have careers, businesses and property when they do marry. This makes them more protective of what they’ve built. Because of this notion, the dreaded prenuptial agreement is starting to lose its stigma. For years, prenups have been a sticking point for couples who saw them as unromantic, signaling a lack of trust or suggesting that one person is planning for the end of the marriage.

The Washington Post’s recent article, “Why you’re more likely to have a prenup than your parents were,” says that over time, the calculations for when and why two people should marry has changed. In the 1970s, about 80% of people had married by age 30, according to a U.S. census report. Last year, that same percentage wasn’t reached until age 45.

Millennials say it’s also important for them to be financially secure before they get married, according to a 2015 survey by Allstate and the National Journal. This sentiment increases the odds that when two people marry, they will each have a career or business they want to protect. Some couples are now leveraging prenups for each person to protect assets they’ve accumulated, as well as to protect future income.

There’s been an uptick in the number of young couples interested in prenups, and they’re talking to their fiancés about it. A 2016 survey from the American Academy of Matrimonial Lawyers showed that 62% of members saw an increase in the number of couples asking about prenups, compared to the previous three years. Fifty-one percent said they noticed more millennials asking for the agreements.

In the 1970s, when couples typically married younger, prenups were mainly used for estate-planning and usually when one partner had significantly more wealth or stood to inherit money. As young people now delay marriage until they are more financially secure, prenups are a way for partners to protect their assets and future income. In addition, prenups are a tool for dividing debt loads, especially student loan debt.

Despite these trends, some couples are still using prenups for more traditional reasons. These agreements still aren’t being considered by others who see them as the first step to a divorce. Speak with an experienced estate planning attorney, if you have questions about these agreements and how one may work in your situation.